Motorola Announces Second-Quarter Sales and Earnings

SCHAUMBURG, Ill., July 19 /PRNewswire-FirstCall/ -- Motorola, Inc. (NYSE: MOT) today reported sales of $8.7 billion for the second quarter of 2007. The GAAP net loss from continuing operations for the second quarter of 2007 was $0.02 per share, which includes net charges of $0.04 per share related to workforce reductions and an insurance litigation matter.

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Thursday, July 19th, 2007

SCHAUMBURG, Ill., July 19 /PRNewswire-FirstCall/ — Motorola, Inc. (NYSE: MOT) today reported sales of $8.7 billion for the second quarter of 2007. The GAAP net loss from continuing operations for the second quarter of 2007 was $0.02 per share, which includes net charges of $0.04 per share related to workforce reductions and an insurance litigation matter.

"This was a challenging quarter for Motorola in which revenue fell short of our expectations due to a decline in mobile device unit shipments," said Ed Zander, chairman and chief executive officer. "However, I am pleased with the solid results within our Home and Networks Mobility and Enterprise Mobility Solutions businesses. Our vision of seamless mobility and the mobile Internet continues to resonate with our customers and partners worldwide. We remain confident that we are taking the right steps to deliver improved performance and to create long-term value for Motorola shareholders."

"Our efforts are focused on improving cash flow from operations and enhancing profitability," said Tom Meredith, chief financial officer. "In addition to cost controls and headcount reductions, which we expect will result in cost savings of $1 billion in 2008, we intend to significantly improve our cash conversion cycle and our return on invested capital."

Operating Results

Mobile Devices segment sales were $4.3 billion, down 40 percent compared with the year-ago quarter. Excluding highlighted items, the segment incurred an operating loss of $264 million, compared with operating earnings of $804 million in the year-ago quarter. Lower sales and earnings are attributable to lower overall unit volumes, particularly in Asia, and the Europe, Middle East and Africa region. Motorola's share of the global handset market for the quarter is estimated to be 13.5%.

During the quarter, Mobile Devices: — Shipped 35.5 million handsets, with continued leadership in North America and Latin America — Shipped the 100 millionth RAZR — Began shipping several new products, including the EV-DO RAZR2, the Q9, the MOTO Z8 and the Linux/Java platform-based GSM RAZR2 and ROKR Z6 — Earned recognition by J.D. Power and Associates for the highest rating in a U.S. consumer satisfaction survey for mobile phones, citing strengths in design, operation and features

"We are committed to improving the performance of the Mobile Devices business. We announced strong new leadership, began shipping a number of new products, and are implementing aggressive cost controls," said Greg Brown, president and chief operating officer.

Home and Networks Mobility, which includes the newly combined Connected Home Solutions and Networks businesses, had segment sales of $2.6 billion, up 9 percent compared with the year-ago quarter. Excluding highlighted items, operating earnings were $207 million, compared with operating earnings of $246 million in the year-ago quarter.

During the quarter, Home and Networks Mobility: — Had strong demand for high-end HD DVR and IPTV devices, as well as the new digital cable host products — Announced plans to acquire Terayon Communication Solutions — Continued its momentum in mobile broadband with WiMax

Enterprise Mobility Solutions, which includes the company's two enterprise businesses – Government and Public Safety and Enterprise Mobility, had segment sales of $1.9 billion, up 42 percent compared with the year-ago quarter. Excluding highlighted items, operating earnings were $302 million, compared with operating earnings of $252 million in the year-ago quarter.

During the quarter, Enterprise Mobility Solutions: — Won a new country-wide Public Safety contract in Denmark — Saw strong demand for enterprise products globally, particularly in EMEA and Asia Pacific — Continued to gain momentum and realize cost synergies from the Symbol acquisition

Outlook

The company's outlook for earnings per share from continuing operations in the third quarter is flat to slightly up compared to second quarter earnings from continuing operations excluding highlighted items. This outlook excludes any reorganization of business charges associated with the company's operating expense reduction initiatives, as well as any other items of the variety highlighted by the company in its quarterly earnings releases. While the company does not expect the Mobile Devices business to be profitable for the full year, it does expect its financial results to improve in the second half of the year.

Conference Call and Webcast

Motorola will host its quarterly conference call beginning at 8:00 a.m. Eastern Time (USA) on Thursday, July 19th, 2007. The conference call will be web-cast live with audio and slides at http://www.motorola.com/investor.

This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to: (1) Motorola's financial outlook for the remainder of 2007; (2) future cost savings from recently implemented costs controls and headcount reductions; and (3) expected improvements in Motorola's cash conversion cycle and return on invested capital. Motorola cautions the reader that the risk factors below, as well as those on pages 16 through 24 in Item 1A of Motorola's 2006 Annual Report on Form 10-K and in its other SEC filings, could cause Motorola's actual results to differ materially from those estimated or predicted in the forward-looking statements. Factors that may impact forward-looking statements include, but are not limited to: (1) the company's ability to improve financial performance and increase market share in its mobile devices business; (2) the level of demand for the company's products; (3) the company's ability to introduce new products and technologies in a timely manner; (4) the company's ability to continue generating meaningful savings from supply-chain improvements, manufacturing consolidation and other cost-reduction initiatives; (5) the company's ability to recognize benefits from its recent changes in business alignment; (6) the uncertainty of current economic and political conditions, as well as the economic outlook for the telecommunications and broadband industries; (7) the company's ability to purchase sufficient materials, parts and components to meet customer demand; (8) unexpected negative consequences from the company's ongoing restructuring and cost-reduction activities; (9) risks related to dependence on certain key suppliers; (10) the impact on the company's performance and financial results from strategic acquisitions or divestitures, including those that may occur in the future; (11) risks related to the company's high volume of manufacturing and sales in Asia; (12) the creditworthiness of the company's customers and distributors, particularly purchasers of large infrastructure systems; (13) variability in income generated from licensing the company's intellectual property; (14) unexpected liabilities or expenses, including unfavorable outcomes to any pending or future litigation or regulatory or similar proceedings, including without limitation any relating to the Iridium project; (15) the timing and levels at which design wins become actual orders and sales; (16) the impact of foreign currency fluctuations; (17) the impact on the company from continuing hostilities in Iraq and conflict in other countries; (18) the impact on the company from ongoing consolidation in the telecommunications and broadband industries; (19) the impact of changes in governmental policies, laws or regulations; (20) the outcome of currently ongoing and future tax matters; and (21) unforeseen negative consequences from the company's outsourcing of various activities, including certain manufacturing, information technology and administrative functions. Motorola undertakes no obligation to publicly update any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.

About Motorola

Motorola is known around the world for innovation and leadership in wireless and broadband communications. Inspired by our vision of seamless mobility, the people of Motorola are committed to helping you connect simply and seamlessly to the people, information and entertainment that you want and need. We do this by designing and delivering "must have" products, "must do" experiences and powerful networks — along with a full complement of support services. A Fortune 100 company with global presence and impact, Motorola had sales of US $42.8 billion in 2006. For more information about our company, our people and our innovations, please visit http://www.motorola.com.

MOTOROLA and the stylized M Logo are registered in the U.S. Patent & Trademark Office. All other product or service names are the property of their respective owners.(C) Motorola, Inc. 2007